Thank you for an outstanding year and supporting our existing Iowa employers.

Transcription

1 December 2016

2 Iowa is a leader in business retention and expansion programming. The collaboration and coordination between economic development professionals, utilities, community colleges and many others have established the culture of working together to build on the strength of our industry clusters. Additionally, having the statewide Business Expansion and Strategic Trends (BEST) structure drives the management and oversight to ensure quality implementation was a transition year of strategic change. The program engaged the Institute for Decision Making and Strategic Marketing Services at the University of Northern Iowa to analyze and aggregate the data to assess the state s economy. A list of targeted companies within the Battelle Study clusters, utilities industrial and large customer segment, and Iowa Economic Development Authority s targets was developed to establish a targeted approach which helps to quantify the health of the state s economy. While more than 1,500 interviews were conducted, the focus of the 2016 annual report identified trend information from 661 interviews completed with the targeted firms across 61 counties in 169 communities. The implementation of Synchronist through BEST, conducting annual interviews, and the ability to better understand the state s strengths, weaknesses, challenges, and opportunities facing Iowa businesses provide the greatest economic advantage. We can now assist employers who are at risk, have the opportunity to expand, need assistance with mature products or face workforce challenges. And just as important, economic developers can plan what changes need to be implemented for a more successful and productive future. Thank you for an outstanding year and supporting our existing Iowa employers. -The BEST of IOWA Management Team Management Team Alliant Energy Scott Drzycimski scottdrzycimski@alliantenergy.com Black Hills Energy Mike Fastenau mike.fastenau@blackhillscorp.com Iowa Area Development Group Bruce Hansen bhansen@iadg.com Iowa Economic Development Authority Chris Cataldo chris.cataldo@iowa.gov MidAmerican Energy Company Deb Calvert dlcalvert@midamerican.com 2

3 DEMOGRAPHIC OVERVIEW The 2016 Annual Report focuses on interviews completed with Iowa companies that are in one of the twelve distinct industry clusters driving Iowa s economy or were identified as major employers by the BEST of Iowa. The industry clusters were identified in 2014 by the Battelle Technology Partnership Practice on behalf of the Iowa Partnership for Economic Progress (IPEP). The interviews were completed between May 2015 and June Over two-thirds of the interviews were completed in Companies Counties Communities 56.3 % Located in metro counties 43.7 % Located in non-metro counties 3

4 COMPANIES BY INDUSTRY CLUSTER Renewable Energy and Avionics & Communications Electronics 3 Research, Engineering & Industrial Design 9 Primary Metals 11 Info Services, Digital Media & Technology 26 Automation & Industrial Machinery 27 Heavy Machinery 36 Insurance & Finance 39 Biosciences 43 Building & Construction Products 47 Agriculture & Food Production 97 Transportation, Distribution & Logistics 99 Not in a Cluster 221 Industry clusters were identified in 2014 by the Battelle Technology Partnership Practice on behalf of the Iowa Partnership for Economic Progress (IPEP). 4

5 NUMBER OF COMPANIES INTERVIEWED BY INDUSTRY SECTOR 420 Manufacturing (NAICS 31-33) 69 Wholesale Trade (NAICS 42) 40 Finance & Insurance (NAICS 52) 31 Professional, Scientific & Technical Services (NAICS 54) 20 Transportation and Warehousing (NAICS 48-49) 18 Information (NAICS 51) 17 Construction (NAICS 23) 15 Retail Trade (NAICS 44-45) 12 Agriculture, Forestry, Fishing and Hunting (NAICS 11) 9 Other Services (NAICS 81) 4 Healthcare and Social Assistance (NAICS 62) 2 Mining and Quarrying, Oil & Gas Extraction (NAICS 21) 1 Accommodation & Food Services (NAICS 72) Educational Services (NAICS 61) Waste Management & Remediation Services (NAICS 56) Utilities (NAICS 22) 5

6 EMPLOYMENT SIZE 1 to 8,500 Total Employment 127,980 Average 196 Employees 20,673 Manufacturing 82,975 Finance and Insurance Companies 7,379 Wholesale Trade Median 75 Employees of Iowa companies interviewed employ 20 to 249 % employees. Among the industry clusters with 20 or more completed interviews, the Agriculture & Food Production cluster, the Building & Construction Products cluster, and the Information Services, Digital Media & Technology cluster all had a similar percentage of companies with 20 to 249 employees. The Insurance & Finance cluster had over half of its companies with 250 or more employees. Top employment clusters included Agriculture & Food Production (26,867) and Insurance & Finance (20,658), followed by Transportation, Distribution & Logistics (12,540). The lowest total employment was the Research, Engineering & Industrial Design at 401 employees. The average company employment level ranged from 1,240.7 employees in the Avionics & Communication Electronics cluster to 44.6 employees in the Research, Engineering & Industrial Design cluster. 6

7 COMPANIES BY EMPLOYMENT SIZE <5 Employees 5-9 Employees 5.8 % 2.2 % 4.3 % 2.8 % 11.1 % Employees Employees 12.0 % Employees Employees 20.1 % Employees Employees 1,000+ Employees 22.6 % 19.2 % According to the Iowa Workforce Development s Quarterly Census of Employment and Wages, the statewide total industry employment in the first quarter of 2016 averaged 1,509,636. The 127,980 total employment reported by the 661 companies interviewed represent approximately nine percent of the state s industry employment. The companies interviewed had an average size of 196 employees per location while statewide the industry establishments averaged just under 15 employees per location. The 420 manufacturers interviewed employed nearly 83,000 individuals, which represents 39 percent of the industry s statewide employment based on the first quarter of 2016 average. The companies interviewed in the finance and insurance industry employed over 20,600 individuals, accounting for 22 percent of the industry s statewide employment based on the first quarter of 2016 average. 7

8 PRIMARY PRODUCT/SERVICE LIFE CYCLE 65.4 % GROWING Nearly two-thirds of the companies have a growing primary product/service. These 403 companies employ 84,862 in 53 counties and 128 different cities. 4.2 % EMERGING 26 companies have an emerging primary product/service. They employ 5,004 in 16 counties and 19 different cities % MATURING 176 companies have a maturing primary product/service. They employ 30,241 in 45 counties and 81 different cities. 1.8 % DECLINING Only 11 companies have a declining primary product/service. They employ 1,473 in nine counties and nine different cities. With over 400 Iowa companies reporting primary products or services in the Growing stage, many of these companies will be focused on building brand preference and market share. These companies should continue to increase demand with little competition while promoting their offering to a larger and/or broader audience. The 176 companies reporting Maturing primary products or services will experience diminishing sales and will seek to defend their market share while also maximizing profit. This may be challenging due to higher levels of competition that often leads to lower pricing or the need to differentiate the product through new innovation. 8

9 TOP 5 EMERGING/GROWING CLUSTERS Iowa s top Emerging/Growing cluster Research, Engineering & Industrial Design is also the smallest by total employment (401). Eight of the nine companies have introduced new products in the last five years and anticipate new products in the next two years as well. The 43 Bioscience cluster companies interviewed employ 6,492. Thirty-five of them have introduced new products or services in the past five years and 33 have plans to introduce a new product/service in the next two years. The Automation & Industrial Machinery cluster employs 4,123 across 27 participating companies. 21 have introduced new products in the last five years and 17 plan to do so in the next two years. Just over 3,900 are employed by the twenty-six participating Information Services, Digital Media & Technology companies. All of them have introduced new products in the past five years and nearly all anticipate doing so again in the next two years. The participant Transportation, Distribution & Logistics cluster companies employ 12,540. Of the 99 companies in this cluster, 74 have introduced new products or services in the last five years, and 69 plan to do so in the next two years. Research, Engineering & Industrial Design 88.9 % Biosciences Automation & Industrial Machinery 77.8 % 84.2 % Information Services, Digital Media & Technology 72.3 % 75.0 % Transportation, Distribution & Logistics 9

10 Total Employment by Life Cycle of Primary Product/Service GROWING 84,862 MATURING 30,241 EMERGING 5,004 DECLINING 1,473 The employers who stated their primary product/service was growing or emerging were located in 55 counties and 133 different cities. Approximately 56 percent are located in metro counties and 44 percent in non-metro counties. The employers who stated their primary product/service was maturing or declining were located in 46 counties and 85 different cities. Nearly 60 percent are located in metro counties with the remaining 40 percent in non-metro counties. Both growing/emerging and maturing/declining companies reported nearly equal levels of recruitment problems (30-31%) and anticipation of significant workforce change (76-78%). However, growing/emerging companies, on average, have a higher number of unfilled positions and higher expectation of continued increasing unfilled positions. As would be expected, growing/emerging companies reported significantly higher increasing market share and sales as compared to maturing/declining companies. 10

11 Business Expansion Manufacturing Expansion Of the surveyed companies, nearly 60 percent of the expanding companies in Iowa are manufacturers. This represents $901M total investment and 1,823 new jobs. Communities May Not Be Considered for Expansion Of the companies with plans to expand, 30 percent may not consider their current community for future expansion. Top obstacles include workforce-related issues, infrastructure/ transportation issues, and geographic location. This represents $497M total investment and 2,659 new jobs % (320 companies) 58.4 % (187 companies) 46.9 % (150 companies) 30.0 % (92 companies) Plans to Expand Nearly 50 percent of companies are reporting plans to expand in the next three years. The estimated total investment (among the 91 companies providing data) is $2.1B and the total estimated number of new jobs created is 4,057. No Room for Expansion Nearly 50 percent of companies with plans to expand reported no room for expansion at their current location. Just over half are located in metro counties and are manufacturers. This represents $342M in total investment and 2,273 new jobs. 11

12 Among the companies with plans to expand... Just over 40 percent (125 companies) stated that merger, acquisition or divestiture activities in their industry is increasing. Nearly one-fourth (72 companies) stated that production in their industry is under capacity while 56 percent/164 said industry production was stable. Nearly 70 percent (222 companies) of the companies with expansion plans in the next three years stated they were experiencing recruitment problems. These companies stated they had 1,468 unfilled positions at the time of their interview. Approximately 23 percent (75 companies) stated the number of unfilled positions was increasing. Just under 55 percent (80 companies) of those who answered the question stated their primary recruitment problems were limited to their community as opposed to their industry. Companies with Expansion Plans Average Workforce Ratings Among companies with expansion plans, Workforce Productivity was rated highest, followed by Workforce Stability and Workforce Quality. However, nearly 44 percent or 138 companies rated Worker Availability in their area as low (rating 3 or lower), with an average of Availability Quality Stability Productivity 12

13 WORKFORCE PRODUCTIVITY STABILITY QUALITY AVAILABILITY AVERAGE RATING 1 (LOW) (HIGH) Among the four areas related to workforce which companies were asked to rate, Workforce Availability had the lowest average rating at Productivity of their workforce had the highest average rating at 5.60, followed by Stability (5.14) and Quality (4.69). Just under 40 percent (262 companies) reported low Workforce Availability (a rating of three or less). Over twothirds of these companies are manufacturers and are mostly comprised of the following clusters: Agriculture & Food Production (43); Transportation, Distribution & Logistics (41); and Building & Construction Products (26). Over 80 percent of the companies reporting low Workforce Availability have introduced a new product in the last five years and 73 percent anticipate a new product in the next two years. Nearly 60 percent of these companies have increasing sales and almost half have increasing market share. In addition, over half have plans to expand in the next three years. Just under two-thirds (74) of the companies reporting low Workforce Availability identified the community as being the primary recruitment problem. Among those companies, 35 would not consider their current community for future expansion. 13

14 WORKFORCE PRODUCTIVITY RATINGS Overall, the Productivity of the Iowa Workforce is above average for the vast majority of the interviewed companies. % % 12.7 % 19.2 % 49.0 % 15.6 % 1 (LOW) (HIGH) Just over 85 percent of the companies (567) reported high Workforce Productivity (a rating of five or more). Among these companies, 60 percent were located in metro counties and 40 percent in non-metro counties. Approximately 63 percent were manufacturers composed mostly from the following clusters: Transportation, Distribution & Logistics (83); Agriculture & Food Production (81); Biosciences (39); Building & Construction Products (37); and Insurance & Finance (37). Eighty-five percent have introduced new products or services in the past 5 years, and 79 percent plan to do so in the next two years. Over 60 percent reported increasing total sales and just over half reported increasing market share. One-fifth of the companies reporting high Workforce Productivity are in an industry with under capacity and nearly 60 percent are in an industry with balanced capacity. Roughly 50 percent have plans to expand in the next three years, but 27 percent indicated there was a reason the current community would not be considered. Just over 68 percent of these companies have recruitment problems, but only 24 percent have experienced or anticipate any significant changes in the make-up of their workforce. Over half (54.5%) indicated their recruitment problems were limited to their community versus their industry (45.5%). However, only 21 percent reported the number of unfilled positions was increasing and the average number of unfilled positions (at the time the survey was taken) was

15 WORKFORCE PRODUCTIVITY AVERAGE RATINGS Among the industry clusters with 20+ completed interviews Clusters had an average rating for Workforce Stability BELOW the 5.60 average. Not in a Cluster Transportation/Distribution & Logistics Insurance & Finance Information Svcs, Digital Media & Technology Heavy Machinery Building & Construction Products Biosciences Automation & Industrial Machinery Agriculture & Food Production AVERAGE

16 WORKFORCE STABILITY RATINGS Overall, the Stability of the Iowa Workforce is above average for the vast majority of the interviewed companies % 37.5 % 17.2 % 11.4 % 8.0 % 0.8 % 3.2 % 1 (LOW) (HIGH) Just over 72 percent of the companies (479) reported high Workforce Stability (a rating of five or more). Among these companies, 64 percent were located in metro counties and 37 percent in non-metro counties. Approximately 61 percent were manufacturers composed mostly from the following clusters: Transportation, Distribution & Logistics (71); Agriculture & Food Production (69); Insurance & Finance (37); Building & Construction Products (32); and Biosciences (31). Eighty-five percent have introduced new products or services in the past five years, and 79 percent plan to do so in the next two years. Just under 60 percent reported increasing total sales and half reported increasing market share. Almost 23 percent of the companies reporting high Workforce Stability are in an industry with under capacity and nearly 60 percent are in an industry with balanced capacity. Roughly 51 percent have plans to expand in the next three years, but 26 percent indicated there was a reason the current community would not be considered. Nearly 65 percent of these companies have recruitment problems, but only 24 percent have experienced or anticipate any significant changes in the make-up of their workforce. Just over half (54%) indicated their recruitment problems were limited to their community versus their industry (46%). However, just under 21 percent reported the number of unfilled positions was increasing and the average number of unfilled positions (at the time the survey was taken) was

17 WORKFORCE STABILITY AVERAGE RATINGS Among the industry clusters with 20+ completed interviews Clusters had an average rating for Workforce Stability BELOW the 5.14 average. AVERAGE Not in a Cluster Transportation/Distribution & Logistics Insurance & Finance 5.84 Information Svcs, Digital Media & Technology 5.48 Heavy Machinery Building & Construction Products Biosciences Automation & Industrial Machinery Agriculture & Food Production

18 Overall, the Quality of the Iowa Workforce is moderately above average for the vast majority of the interviewed companies % 11.2 % 8.1 % WORKFORCE QUALITY RATINGS 29.7 % 25.4 % 1.8 % 5.8 % 1 (LOW) (HIGH) Nearly 63 percent of the companies (416) reported high Workforce Quality (a rating of five or more). Among these companies, 62 percent were located in metro counties and 38 percent in non-metro counties. Approximately 60 percent were manufacturers composed mostly from the following clusters: Agriculture & Food Production (62); Transportation, Distribution & Logistics (60); Insurance & Finance (35); and Biosciences (31). Eighty-four percent have introduced new products or services in the past five years, and nearly 80 percent plan to do so in the next two years. Just under 60 percent reported increasing total sales and almost half reported increasing market share. Nearly 22 percent of the companies reporting high Workforce Quality are in an industry with under capacity and nearly 61 percent are in an industry with balanced capacity. Fifty-one percent have plans to expand in the next three years, but 27 percent indicated there was a reason the current community would not be considered. Over 60 percent of these companies have recruitment problems, but only 20 percent have experienced or anticipate any significant changes in the make-up of their workforce. Fifty-five percent (55%) indicated their recruitment problems were limited to their community versus their industry (45%). However, only 18 percent reported the number of unfilled positions was increasing and the average number of unfilled positions (at the time the survey was taken) was

19 WORKFORCE QUALITY AVERAGE RATINGS Among the industry clusters with 20+ completed interviews Clusters had an average rating for Workforce Stability BELOW the 4.69 average. AVERAGE Not in a Cluster Transportation/Distribution & Logistics Insurance & Finance Information Svcs, Digital Media & Technology Heavy Machinery Building & Construction Products Biosciences 5.13 Automation & Industrial Machinery 4.19 Agriculture & Food Production

20 WORKFORCE AVAILABILITY RATINGS Overall, the availability of the Iowa Workforce is slightly below average for the vast majority of the interviewed companies % 19.1 % 16.2 % 19.7 % 14.6 % 6.7 % 2.4 % 1 (LOW) (HIGH) Only 40 percent of the companies (263) reported high Workforce Availability (a rating of five or more). Among these companies, 63 percent were located in metro counties and 37 percent in non-metro counties. Approximately 61 percent were manufacturers composed mostly from the following clusters: Agriculture and Food Production (40); Transportation, Distribution & Logistics (34); Insurance & Finance (26); and Biosciences (21). Eighty-four percent have introduced new products or services in the past five years, and nearly 81 percent plan to do so in the next two years. Almost 60 percent reported increasing total sales and just under half reported increasing market share. Nearly 19 percent of the companies reporting high Workforce Availability are in an industry with under capacity and nearly 67 percent are in an industry with balanced capacity. Fifty-six percent have plans to expand in the next three years, but 22 percent indicated there was a reason the current community would not be considered. Just over half of these companies have had recruitment problems, but only 19 percent have experienced or anticipate any significant changes in the make-up of their workforce. Approximately 57 percent indicated their recruitment problems were limited to their community versus their industry (43%). However, only 13 percent reported the number of unfilled positions was increasing and the average number of unfilled positions (at the time the survey was taken) was

21 WORKFORCE AVAILABILITY AVERAGE RATINGS Among the industry clusters with 20+ completed interviews Clusters had an average rating for Workforce Stability BELOW the 3.84 average. Not in a Cluster Transportation/Distribution & Logistics Insurance & Finance Information Svcs, Digital Media & Technology Heavy Machinery Building & Construction Products Biosciences Automation & Industrial Machinery Agriculture & Food Production AVERAGE

22 WORKFORCE RECRUITMENT The larger the employment size of the company, the higher likelihood the company is experiencing a workforce recruitment problem. Nearly 86 percent of the companies with 500+ employees were experiencing a workforce recruitment problem while 51 percent of the companies with 1-19 employees were experiencing a workforce recruitment problem. of companies stated they were experiencing workforce recruitment problems Of those companies were located in METRO COUNTIES companies stated that their primary recruitment problem was limited to their community Of those companies were MANUFACTURERS 22

23 WORKFORCE RECRUITMENT PROBLEM by EMPLOYMENT 85.7 % 78.7 % The larger the employment size of the company, the higher the likelihood that the company is experiencing a workforce recruitment problem % 66.1 % 1-19 employees employees employees 500+ employees Production Occupations Engineering Occupations Installations, Maintenance & Repair Occupations Transportation & Material Moving Occupations Among the companies with recruitment problems, these were the most frequently identified positions or occupations. Clusters with the highest number of unfilled positions included: Agriculture & Food Production (604); Transportation, Distribution & Logistics (271); and Insurance & Finance (255). Unfilled positions in the 661 companies that were interviewed Companies in non-metro counties with unfilled positions Manufacturing was the industry with the most unfilled positions The unfilled positions in companies with employees 2, % 1, % 23

24 The vast majority of the companies interviewed stated that their number of unfulfilled positions is stable. Clusters where over twothirds of the companies stated the number of unfilled positions for their company was increasing included: Information Services, Digital Media & Technology; Automation & Industrial Machinery; and Insurance & Finance % TREND in UNFILLED POSITIONS INCREASING STABLE 71.5 % 21.7 % DECREASING 6.8 % 23.1 % 21.7 % 17.7 % Companies with 100 to 499 employees reported the highest level of increasing 8.8 % unfilled positions, followed by companies with 500 or more employees. 1 to to to or more All PERCENTAGE of COMPANIES with INCREASING UNFILLED POSITIONS by EMPLOYMENT SIZE 24

25 WORKFORCE TRAINING Companies increasing their investment in workforce training AVERAGE TRAINING BUDGET SPENDING 48.8 % Proficiency Training Companies who stated their investment in workforce training was stable 42.1 % 9.2 % New Job Skills Training Remedial Skill Training Nearly 87 percent (574) of the companies interviewed stated their investment in workforce training was increasing or stable. Among these companies, 57 percent were located in metro counties and 43 percent in non-metro counties. Approximately 63 percent were manufacturers, comprised mostly from the following clusters: Transportation, Distribution & Logistics (90); Agriculture and Food Production (88); Building & Construction Products ( 40); Biosciences (35); Insurance & Finance (34); and Heavy Machinery (32). Eighty-four percent have introduced new products or services in the past five years, and 78 percent plan to do so in the next two years. Just over 70 percent of these companies have had recruitment problems, with 24 percent have experienced or anticipate any significant changes in the make-up of their workforce. Approximately 55 percent indicated their recruitment problems were limited to their community versus their industry (45%). Just under one quarter reported the number of unfilled positions was increasing and 71 percent said it was stable. The average number of unfilled positions (at the time the survey was taken) was Average workforce ratings for companies making increasing or stable investments in training were as follows: Availability 3.85; Quality 4.69; Stability 5.14; and Productivity

26 PRODUCTS & SERVICES Companies that stated they had introduced a new product/service over the past five years. All of the companies that stated their primary product/service was EMERGING had introduced a new product/service over the past five years. 88 percent of the companies that stated their primary product/service was GROWING had introduced a new product/service over the past five years. 75 percent of the companies that stated their primary product/service was MATURING had introduced a new product/service over the past five years. Companies that stated their company anticipated introducing a new product/service over the next two years. 92 percent of the companies that stated their primary product/service was EMERGING anticipated introducing a new product/service in the next two years. 82 percent of the companies that stated their primary product/service was GROWING anticipated introducing a new product/service over the next two years. 68 percent of the companies that stated their primary product/service was MATURING anticipated introducing a new product/service over the next two years. Just over half of the companies that stated their primary product/service was DECLINING anticipated introducing a new product/service in the next two years. Companies that stated they had not introduced a new product service over the past five years and did not anticipate doing so in the next two years. 26

27 R&D SPENDING OF THE COMPANIES THAT WERE INTERVIEWED: stated their company does not invest in R&D. As a percentage of a company s R&D budget, the highest percentages of spending were for new product development and the lowest were for production improvements. COMPANIES THAT DO INVEST IN R&D: spent one to two percent of their sales on R&D. spent three to six percent of their sales on R&D. PERCENTAGE of R&D BUDGET NEW PRODUCT DEVELOPMENT PRODUCT IMPROVEMENTS 34.0 % 33.5 % 33.0 % 40.3 % PRODUCTION IMPROVEMENTS 25.4 % 25.0 % Average Percentage Median Percentage 27

28 MARKET REGIONAL 29.6 % 29.6 % INTERNATIONAL LOCAL 4.3 % NATIONAL 50.9 % Over half of the companies interviewed stated their company s primary market was a national market. Sales Over half (57%) of the companies stated their sales were increasing. Only ten percent stated their sales were decreasing and among those companies 46 percent stated their primary product/service was either maturing or declining. Market Share Nearly all of the companies stated their company s market share was either increasing (47%) or stable (44%). Among the companies with a growing market share, 73 percent said their primary product/service was growing in its life cycle. The vast majority of the companies with a growing market share stated they had introduced a new product/ service in the last five years (88%) and anticipated introducing a new product/service in the next two years (83%). Over a third of companies (38%) who stated their market share was stable said their primary product/service was either maturing or declining in its life cycle. 28

29 INDUSTRY Over Capacity Balanced The majority of the companies interviewed stated production was balanced in their industry percent stated their industry was under capacity which could mean the possibility of future consolidation within their industries and have a negative impact on facilities in Iowa. On the flipside, 19.3 percent stated their production in their industry was over capacity in their industry which could create opportunities for expansions in Iowa. Under Capacity of the companies stated that merger, acquisition or divestiture activity in their industry was increasing. Among the industries with 20 or more completed interviews, all but two of the clusters had a higher percentage of companies stating their industry was under capacity for production in their industry. Over a quarter of the companies (27%) in the heavy machinery cluster and 23 percent of the companies in the information services, digital media & technology cluster stated their industry s production was over capacity. 29

30 INDUSTRY PRODUCTION TREND by INDUSTRY CLUSTER Not in a Cluster 16.1 % 25.1 % Transportation/Distribution & Logistics 7.8 % 21.1 % Insurance & Finance Information Service, Digital Media & Technology 19.4 % 18.2 % 22.7 % 29.0 % Heavy Machinery 26.5 % 32.4 % Building & Construction Products 13.6 % 20.5 % Biosciences Automation & Industrial Machinery Agriculture & Food Production Over Capacity in Industry Under Capacity in Industry 14.3 % 20.0 % 16.7 % 20.8 % 18.1 % 26.5 % 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 30

31 ANTICIPATING ADVERSE LEGISLATION of the companies stated they anticipated that either federal, state or local legislation changes will adversely affect their business in the next five years. Some of the more frequently Insurance & Finance Information Services, Digital Media & Technology identified changes included healthcare related requirement and regulations, labor and workplace Not in Cluster related requirements (new overtime regulations, minimum wage rules, OSHA rules and DOT rules on truck Agriculture & Food Production driver hours) and environmental regulations (EPA rules, air emissions, water quality). Half of the industry clusters with 20 or more completed interviews had at least half of their companies stating Transportation, Distribution & Logistics Automation & Industrial Machinery they anticipated that either federal, state or local legislation changes will adversely affect their business in the next five years. The insurance and finance cluster had the highest percentage with 64.1% of its companies stating they anticipated Biosciences Building & Construction Products being negatively affected. Heavy Machinery 31

32 BEST of Iowa Annual Report 12/2016 Prepared by Strategic Marketing Services and Institute for Decision Making at The University of Northern Iowa 32